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Helms says curtailing oil production necessary to reduce flaring

WILLISTON, N.D. – New state rules on natural gas flaring could reduce North Dakota oil production by 15,000 to 30,000 barrels per day, the state’s top oil and gas regulator estimated Friday.

Lynn Helms, director of the Department of Mineral Resources, said some curtailment of oil production will be necessary to reduce flaring and encourage operators to more quickly implement gas gathering systems.

The North Dakota Industrial Commission will take input during a public hearing on April 22 on changes to the state’s production restrictions, which date back to the the late 1980s and don’t work for Bakken wells, Helms said.

How much oil production will be affected depends on how the rules are modified, but Helms said “it will be significant and measurable.”

“There will be a reduction in oil and gas production as a result,” he said.

However, once North Dakota surpasses the milestone of producing 1 million barrels of oil per day – which Helms projects will occur in March or April – the state is expected to stay above that 1 million barrel figure, he said.

North Dakota oil production increased 1.7 percent in February to 951,340 barrels per day, hampered by cold temperatures and high wind gusts, Helms said Friday, citing preliminary figures.

The state produced nearly 1.1 billion cubic feet per day of natural gas during the month, the preliminary figures show.

In addition to weather, production was affected by more than 100 wells that were shut down during the month to minimize natural gas flaring while the Hess Corp. gas processing plant at Tioga was converting to an expanded plant.

The percent of natural gas flared remained at 36 percent, which ties the historical high set in September 2011. The volume of gas flared was 10.95 billion cubic feet during February, Helms said.

The Hess plant resumed processing gas at the end of March and is expected to be at full capacity at the end of this month, Helms said. When the plant is fully operational, Helms projects that flaring will drop by 10 to 15 percentage points.

One example of a change the state is considering to reduce flaring is to change the policy for wells that are connected to gas-gathering lines. Currently, there are no production restrictions for a well that is connected to a gas pipeline, even if it is only capturing a small percent of the gas, Helms said.

Seventeen percent of the gas flared in February, or roughly half, came from wells that were connected to pipelines, said Justin Kringstad, director of the North Dakota Pipeline Authority.

Rail transportation of crude oil fell from 72 percent in January to 67 percent in February, driven by changes in market conditions that prompted more companies to transport oil by pipeline, Kringstad said.

The total amount of crude transported in North Dakota via rail, including some Montana production, was 700,000 to 730,000 barrels per day, Kringstad said.

North Dakota, which had been breaking records nearly every month until recent winter weather slowed production, did have one new record in February. The state had 10,186 producing oil and gas wells that month, the preliminary figures show, which is a new all-time high for the state.